Question

Brenton Chair's cost formula for its supplies cost is $1,620 per month plus $13 per chair....

Brenton Chair's cost formula for its supplies cost is $1,620 per month plus $13 per chair. For the month of April, the company planned for activity of 882 chairs, but the actual level of activity was 878 chairs. The actual supplies cost for the month was $13,500. The supplies cost in the flexible budget for April would be closest to:

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Answer #1

The supplies cost in the flexible budget for April would be closest to:

$ 466 Unfavorable

Working:

Step-1:Calculation of Standard cost
Standard cost = Fixed cost+Variabel cost per unit*Number of units in the month
= $       1,620 + 878 * $          13
= $     13,034
Step-2:Calculation of activity variance
Standard cost $     13,034
Actual cost $     13,500
Difference in cost $ 466 Unfavorable
Since Actual cost is in excess of Standard cost, it is $ 466 Unfavorable Variance.
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